Correlation Between Mueller Industries and Ampco Pittsburgh

Can any of the company-specific risk be diversified away by investing in both Mueller Industries and Ampco Pittsburgh at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mueller Industries and Ampco Pittsburgh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mueller Industries and Ampco Pittsburgh, you can compare the effects of market volatilities on Mueller Industries and Ampco Pittsburgh and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mueller Industries with a short position of Ampco Pittsburgh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mueller Industries and Ampco Pittsburgh.

Diversification Opportunities for Mueller Industries and Ampco Pittsburgh

-0.31

Correlation Coefficient

Mueller Industries  Ampco Pittsburgh

Very good diversification

The 3 months correlation between Mueller and Ampco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mueller Industries and Ampco Pittsburgh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampco Pittsburgh and Mueller Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mueller Industries are associated (or correlated) with Ampco Pittsburgh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampco Pittsburgh has no effect on the direction of Mueller Industries i.e., Mueller Industries and Ampco Pittsburgh go up and down completely randomly.

Pair Corralation between Mueller Industries and Ampco Pittsburgh

Considering the 90-day investment horizon Mueller Industries is expected to generate 0.65 times more return on investment than Ampco Pittsburgh. However, Mueller Industries is 1.54 times less risky than Ampco Pittsburgh. It trades about 0.2 of its potential returns per unit of risk. Ampco Pittsburgh is currently generating about -0.01 per unit of risk. If you would invest  8,100  in Mueller Industries on August 24, 2024 and sell it today you would earn a total of  1,070  from holding Mueller Industries or generate 13.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Mueller Industries  vs.  Ampco Pittsburgh

Mueller Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mueller Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Mueller Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ampco Pittsburgh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampco Pittsburgh has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Mueller Industries and Ampco Pittsburgh

The main advantage of trading using opposite Mueller Industries and Ampco Pittsburgh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mueller Industries position performs unexpectedly, Ampco Pittsburgh can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ampco Pittsburgh will offset losses from the drop in Ampco Pittsburgh's long position.

The idea behind Mueller Industries and Ampco Pittsburgh pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.